Assessment of Knowledge Management Practices In Jordan Kuwait Bank Page 1

Assessment of Knowledge Management Practices

In Jordan Kuwait Bank
A Case Study

Sahim Ibrahim Kasht
Professor: Rifat O. Shannak
University of Jordan

Abstract
Knowledge is a valuable corporate asset and it must be managed properly . Knowledge Management
plays a vital role in any organization and provides it with many competitive advantages , that could
boost its position in such a highly dynamic business environment . This study aims to evaluate
knowledge management practices in Jordan Kuwait Bank, through describing the main basis,
mechanisms and systems that enhance the application of its processes . Moreover, this study shows
some impacts of Knowledge Management Application in the bank , as well as presenting some
recommendations that could improve knowledge management implementation.
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Key Words and Abbreviations: KM (Knowledge Management) , JKB ( Jordan Kuwait Bank).
About JKB
Jordan Kuwait Bank (JKB) is one of the largest Jordanian Banks and public shareholding companies in
Jordan. That is, Its Total assets exceed 2.5 billion Jordanian dinars. The bank currently operates a
domestic network of 56 branches and offices distributed throughout Jordan , in addition to two
branches in Palestine and a branch in Cyprus. The banks paid-up capital was gradually increased from
JD 5 million in 1976 to JD 100 million (USD 141m) in 2008. According to the bank's website, its
philosophy rests on the concept of bringing capital into Jordan from other Arab countries, especially
Kuwait.
The Study:
Defining Knowledge Resources:
Knowledge resources in JKB include mainly the knowledge embedded in its employees. Executives,
managers and lower level employees have all the available knowledge regarding their field of work.
They also have the needed expertise and skills that allow them to perform their job distinguishly from
any person which is not specialized in their job. These expertise represent a valuable knowledge
resource for the bank, and efforts are oriented towards maintaining and sharing them.
In terms of the structural capital, the bank has huge customer databases that include detailed
information about clients, their accounts, and transactions. Policies, Instructions and Standard
Operating Procedures represent also a valuable knowledge resource that guides the behavior of
employees and management. In addition, Central Bank rules and instructions as well as information
obtained from benchmarking best practices may be considered as one the bank's knowledge
resources. Policies, SOPs and other codified rules and regulations will be discussed later in this study
as mechanisms that enhance the application of knowledge management.
Overall, I could conclude that although most tacit knowledge is - naturally- not codified or defined
exactly, employees and managers know through experience, where that knowledge resides and how it
can be used and shared for the benefit of the bank.
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Awareness of the KM Concept and its Importance
At the senior management level, Knowledge Management practices are highly valued and
appreciated. The Top Management Team allows the implementation of KM through enabling the
appropriate mechanisms and affording systems that are needed to apply KM. They adopt different
ways and tools in order to ensure that knowledge is codified and continuously distributed across the
organization, as will be discussed later in this study. On the other hand, employees at the operational
level may be less aware of the concept of KM and its importance to the bank. But, as mentioned
before, they practice it, share it and try to find and apply it without knowing how to classify or manage
it.
KM Infrastructure :
Corporate Culture
Access to information and familiarity with work procedures, represent an important issue for the
bank's employees. The prevailing culture incorporates that knowledge about work and how to deal
with problems is vital for career development and the overall bank improvement. This makes
employees more committed to capturing knowledge and sharing it.
The concept of (The Comprehensive Banking Employee) or (Total Banker), which was introduced
lately, suggests that an employee must be aware of all the bank operations and be able to provide all
services to customers in a branch. Such a concept , stimulates the capturing and sharing of knowledge
in the bank .
However , There are some employees and managers that are reluctant to share knowledge with
others, because they fear to be replaced by those gaining the new knowledge . The bank management
tries to change this thinking by persuading employees and managers that if they share their
knowledge , they will be able to get promoted because management finds someone to replace their
position.
The Culture also motivates employees who come up with innovative products or services , through the
management providing incentives for those employees . For example , The Bank gives a monthly
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award for the (Best Employee) in each branch . Such Awards could enhance the discovery of new
knowledge .
Organizational Structure :
The bank structure could be considered both centralized and decentralized . According to best
practices , there should be some banking process and functions conducted in a traditional hierarchical
manner , such as actions taken to provide large loans . On the other hand , decentralization exists
through the forming of teams to execute projects like developing new systems . This can be found
particularly in the IT , Compliance and Risk management Departments . Such type of structuring could
enhance the possibility of employees meeting each other (socializing) to discover and share
knowledge.
Communities of practice also exist through the bank because of the large number of dispersed
branches , in Amman , Aqaba , Irbid as well as Palestine and Cyprus . These communities enable its
members to share information about significant issues through video calls and telephones .
Having a library near training halls also facilitates knowledge sharing and capturing , this library
includes a vast amount of books specialized in banking , finance and management , in which
employees can benefit from.
IT Infrastructure
The bank has a variety of systems that could be considered as an IT Infrastructure for KM .
Troubleshooting Systems, Databases , Management Information Systems and other systems provide
the capabilities that are needed to process , store and communicate data that are relevant to the bank .
These Systems and their impact on KM will be discussed later in the study .
Common Knowledge
Banking Norms represent generally the most common knowledge for all bankers and financial
institutions. Those Norms are not codified or easily learned , but most employees are fully aware of
them, due to the nature of their field and environment.
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Physical Environment
The layout of the bank offices , whether in the Head office or the branches support the process of
sharing knowledge across employees . That is , the bank developed open-plan offices with delicate
arrangements that enable employees to interact face to face and help each others . The employees also
meet regularly in corridors and talk to each other . Moreover, The Bank organizes a night forum
weekly , in which employees can discuss their work issues as well as their personal issues .
Organizational Mechanisms That Support KM
Learning by doing
When a new employee arrives to the bank , a current employee supervises his/her work . The new
employee is asked first to do a specified job under the supervision of his trainer , later on , he will be
asked to do the job by himself /herself .The bank makes sure to assign less riskier projects to newly
recruited employees, in which any error can be edited or fixed easily . For example , new employees
are asked to make data entries regarding customers' data and accounts . Thus , any fault in data entry
can be edited without problems. This learning facilitates the process of knowledge capturing through
the transfer of knowledge from an explicit to an implicit form.
Learning be observation
Learning by observation which is usually used by interns and new employees represents another way
of capturing the knowledge related to a job . An intern could watch how the teller work daily for a
week , and observe the sequence of procedures that is required to do his job . He could watch also the
way in which the teller counts and moves money in his hand .
On the Job Training
In JKB , each new employee has a colleague or a coach that shows him the steps that are required to do
a job . The bank also provides internal on the job training videos that make employees aware of how
to do the jobs.

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Off the job training
The Bank has a large hall that looks like a real bank branch including its offices,systems,and
computers. All trainees are required to spend at least 3 months in the ( Simulated branch) in order to
be ready to perform all the banking tasks properly when moved to the real branch or department. The
trainees are given money and simulated transactions to deal with . There is a supervisor that oversees
the process of employees training and ensures that every employee will be ready to do his job . The
new employees are also trained on how to deal with customers and communicate with them gently,
so as to maximize customer satisfaction and, as a result , increase the overall bank performance .
Job Rotation
At JKB , every employee , whether in the head office or the branches, is required to move between
departments and jobs from a period of time to another . To increase customer satisfaction through
reducing the time of waiting , each typical employee at JKB is trained to perform all the simple or direct
banking operations such as making deposits , withdrawals , data entry and check endorsement . Job
Rotation enables knowledge related to previously mentioned banking operations to be easily captured
by employees . It enables them as well to discover knowledge through the process of socialization.
Brainstorming
Brainstorming is considered to be an effective mechanism for knowledge discovery through
employees and managers interactions . When an unusual non-systematic problem occurs in JKB, a
group of managers from different departments , such as the head of operations , the head of legal
affairs , and the of head of IT department meet , and they discuses in details the problem and try to
come up with new solutions through the process of brainstorming . Brainstorming is also used if the
top management team wants to create an innovative and competing product or service .
Best Practices
Knowledge can be transformed from tacit to explicit through using and benchmarking best practices.
For JKB , (Basel Committee on Banking Supervision) formulates broad supervisory standards and
guidelines and recommends statements of best practice in banking supervision .
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For example , according the Basel Committee, the best or standard time for an Automatic Teller
Machine (ATM) to make a full money deposit (putting money into an account ) after entering the pin
code is 5.5 seconds.
Standard Operating Procedures
SOPs - As mentioned before - are considered a valued structural asset and knowledge resource. The
core of the explicit knowledge at JKB is the bank's codified work procedures , which is translated by
establishing a big separate department named "Department of Quality and Process Development " .
JKB has detailed work procedures that ensures every employee has a written code which clarifies all
tasks that should be done by the employee in particulars , so the employee can know what is required
from him , and what actions he should follow to achieve his tasks .Each bank procedure ,is divided into
three separate stages ( Inputs , Processing , Outputs ) , so every operation can be considered as a
system , and every employee know what is required to be an outcome and an input. SOPs mainly
emphasize the process of knowledge application through providing directions to employees .

Policies
The Bank has general written guidelines that are related to each field of banking . Those policies direct
the overall employee performance in a task and as a result smooth the progress of knowledge
application . Credit and Investment Policies are examples of banking policies .

Finally , we may not find in a direct way an associational knowledge in the bank operations . That is ,
employees usually seek the main reason for conducting each task and they try to get the most deep
theoretical knowledge about how and why to perform the specified work .



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Knowledge Management Systems in JKB
Databases
Databases are used in the back end of most banking applications (i.e. Core banking system, ATM
switch, swift, etc...), where the results of all transactions are stored on databases. All customers'
records are stored on databases and they can be accessed and updated through the banking
applications. Using databases allows employees to access information centrally and perform all sorts
of operations such as making an inquiry.

Data mining tools
Data Mining Tools in JKB are used to extract valuable information (usually statistics) from large and
historical databases. One example of data mining tools that are used in the bank are the customer
relationship management systems, in which customers transactions are analyzed and their trends are
calculated for better decision making , regarding for instance, the geographic allocation of branches .

Web portals
Those are used inside the bank (as an internal website) to represent an enterprise-wide
communication tool. For example an internal portal may be used to publish internal policies and
procedures. Moreover, it can be used by employees to apply for requests such as vacations, leaves and
loans .

Best practices databases:
Such Databases collect sets of best practices in certain areas in a database form. They can be updated
regularly when ever changes are presented. Best practices databases can be used in the organization
as a reference for performing functions across the organization. Doing so will enable employees and
their organization to deliver services and products according to the best ways that are followed all
over the world.


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Videoconferencing:
Branch Managers outside Jordan meet with the General Manager and multiple parties at the same
time using video cameras. This can be done using high speed network and internet connections.

Email
An Email by all means is a vital tool that is used by the majority of today organizations. JKB uses
servers and internet connections to exchange messages and all sort of files between employees inside
the organization and with any external party. This tool provides a quick, easy, and secure mean of
communication and shortens the time needed to exchange files and data. Another added value is the
ability to send the same information to multiple recipients at the same time.

Computer based simulations
Computer Based Simulations can be used to simulate the behavior of the bank end users on certain
applications. As a result , knowledge can be transformed from an explicit to a tacit form
(Internalization). The idea is to make a program that performs banking transactions or operations that
are done usually by humans. One type of computer simulations that are used in JKB is the (Stress
Testing Rehearsals) , where programs are launched to simulate a huge number of transactions in a
small period of time. This allows employees to test the ability of the system for handling transactions
in peak times, and allow the bank to prepare the adequate hardware requirements to operate its
application in a proper way.

Troubleshooting Systems
Troubleshooting Systems include tools that are used to test computer or network devices and
programs then find out the reasons of malfunctions .These systems usually use a walkthrough manner
with the user to guide him how to troubleshoot a certain application or device. Some types even
perform an automated set of procedures and commands to troubleshoot and give out a report. These
tools support employees to recognize the reasons of computer problems quickly and minimize the
downtime for computer systems.

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Management Information Systems
Management Information systems In JKB work by collaborating organizational wide information
(Gathering data from multiple systems) and generating internal and external reports. These reports
can vary from statistics to financial results. Internal employees benefit from MIS by getting calculated
reports used in their daily operations. Top management also use MIS reports to monitor the
organization's performance and profits.

Impact of KM practices on JKB

Knowledge management practices enable improvements in the bank processes , through performing
them effectively , efficiently and innovatively . Some specialized systems can now calculate interests
and payments more faster than before , reducing the number of employees in the credit department
and letting work flow more efficiently . The Balance sheet of the bank which include millions of
transactions monthly can be calculated at any moment everyday through the use of developed
systems .

KM practices as well , improve the bank services and products . The NetBanker System which is
available on JKB website enable every client to access his account and make transactions easily . The
NetBanker also allows clients to order debit and credit cards as well checkbooks.

KM systems and mechanics that facilitate knowledge sharing and capturing enable the development
of knowledge employees that perform tasks quickly and in a creative manner. Employees now are
aware whether through organizational mechanisms or systems how to do their jobs through written
procedures . The HAY System which is used in the Human Resources department organizes payrolls ,
receives vacation requests , and provides as well data about each employee and his performance.
The Bank recently , purchased a system that detect money laundry and similar actions . Such system
could be considered as a data mining tool that analyze the relation between clients , it discovers as
well any suspicious transactions that could occur . As a result , the bank maintain a high level of
security and reduces the chances of any money stealing or fraud.
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Recommendations
Overall , JKB use of knowledge management practices , through obtaining the suitable infrastructure ,
mechanisms and using the available KM solutions could be considered as moderate and reasonable .
However , Some recommendations are suggested to improve KM Implementation and gain a
competitive advantage in the Banking Sector .
Some Recommendations Include :
1. To let knowledge management one of the subjects that take place in the Bank's training plan , in
order to make employees more aware of the KM concept and practices .
2. Developing a guidebook or a manual that is accredited by the top management , to show the
knowledge reservoirs and clarify the ways to discover,capture,share and apply knowledge for the
benefit of the bank .
3. Assigning the role of providing a yearly report about the bank position regarding KM practices .
4. Purchasing or developing a Decision Support system that could aid managers in the process of
decision making .
5. Award employees who can transfer their own tacit knowledge into explicit knowledge that can be
easily captured and shared through using models , prototypes or giving presentations.





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References
Interview with Mr. Ibrahim Kasht - The Head of Legal Affairs - Jordan Kuwait Bank.
Interview with Mr. Mohammad Azem - The Head Risk Management Department - Jordan Kuwait
Bank
Interview with Mr . Alaa Qadoumi , The Supervisor of Systems control - Department of Information
Technology - Jordan Kuwait Bank.